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  • 1. CG in USA
  • 2. Core Policies
    • All Directors elected annually by confidential ballots (votes by shareholders) counted by independent tabulators
    • 2/3 rd of a corporation’s Directors should be independent. (only connection is Directorship)
    • Corporations should disclose required information to the shareholders to ascertain if the Director is really independent
    • Corporations should have audit, nominating and compensation committees
  • 3. Core Policies
    • A majority vote of common shares outstanding should be required to approve major decisions concerning pledge or sale of corporate assets which have a material effect on shareholder value.
    • Council of Institutional Investors – CG Policies establish goals and guidelines of publicly traded corporations.
  • 4. General Principles
    • Share holding voter rights
    • Each share should have 1 vote
    • Allowed to vote on unrelated issues individually
    • A majority vote should be sufficient to amend company by laws
    • Majority vote of common shares enough for important corporate decisions like buyback, change in ownership of 20% or more of the assets, ESOP introduction, compensation for employees, going for debt etc.
  • 5.
    • Share holder meeting rights
    • Time and location of meeting should take into account shareholders expense and convenience
    • Appropriate notice of meetings should be given so that shareholders can exercise their franchise
    • All Directors should attend the meetings and answer shareholder questions if any.
    • Corporations should not adjourn a meeting just for the lack of votes on a item.
    • Remote shareholder meetings only as a supplement to the in person meetings
    • Shareholders rights to call a meeting are fundamental and corporations cannot deny such meetings if permitted by state laws or by corporation’s article of incorporations
  • 6. Board’s Accountability to shareholders
    • Former Directors cannot be given the powers to act on behalf of the co.
    • Board should take action on shareholder proposals that receive a majority no. of votes
    • Directors should respond to communications from shareholders and should seek their views on governance, management and performance
    • The Board should disclose individual attendance figures of every Director at committee/board meetings
  • 7.
    • Director and Management Compensation
    • Annual approval required from a majority of the Directors for CEO compensation
    • Directors should be compensated only in cash or stock
    • Board should award CEO no more than one form of equity compensation
    • Companies should take all the above as expenses in their income statements
    • Any changes in the above patterns of compensation should be reported in the annual statements.
  • 8.
    • Positions
    • An action should not be taken if it is to reduce its accountability to shareholders
    • CG policies should serve to enhance equal treatment for shareholders
    • Shareholders should have meaningful ability to participate in major decisions that affect corporate viability.
    • Shareholders should have meaningful ability to nominate director candidates and also for processes for their selection and evaluation
    • Directors who attend less than 75% of meetings for 2 consecutive years should not be re-nominated
    • The Board should evaluate itself and its members on a continual basis. It should comprise of members having a diverse set of skills, background, experiences, ages, races and genders appropriate to the company’s on going needs.
  • 9. Board Size and Service
    • Neither too small nor too large to be efficiently functional. No less than 5 members or no more than 15 members. Shareholders should be allowed to vote for any major change in Board size.
    • Co. should specify guidelines as to how many Board memberships can be taken by a Director.
    • In any case not more than 5 for profit company Boards
  • 10. Board Meetings & Operations
    • Meaningful information in a timely manner to Directors prior to Board meetings
    • Directors to be allowed to place items on Board agendas.
    • Directors to receive training from independent sources on their responsibilities and not rely exclusively on information provided by the CEO
    • The Board should hold regularly executive sessions without CEO or staff present.
    • The Board should approve and maintain a CEO succession plan.
  • 11. Auditor independence policy
    • Should not perform any non-audit services for its clients with exceptions.
    • The Board or audit committee should seek competitive bids at least every five years.
    • The audit committee should comprise of independent Directors alone.
    • Auditor independence policy to be disclosed.
  • 12. Compensation
    • Pay for Directors and managers should be indexed to peer or market.
  • 13. Thank You